Global Market – U.S. Fed, ECB & BOE meeting outcome – Different interest rate policy
This week, we will discuss U.S Fed, ECB & BOE meeting outcome. All 3 central banks have kept rate unchanged, but their commentary was different. We will discuss what is decision by these central banks and how market has reacted to it.
US Fed meeting outcome on 13-Dec-23
• US Fed keeps rate unchanged at 5.25% to 5.50%.
• The Fed statement was extremely on the dovish side. The U.S. central bank is unlikely to raise rates any further, bringing an end to its most aggressive tightening cycle in decades.
• FOMC members forecast THREE rate cuts in 2024 amounting to 75Bbps worst of policy easing.
• The Fed’s statement said it will assess the extent of ‘ANY’ additional policy firming, adding the word ‘any’.
ECB meeting outcome on 14-Dec-23
• ECB hold key interest rate at 4.50%
• ECB will step up to exit from € 1.7 billion of pandemic era stimulus package. ECB will accelerate end of reinvestment under the PEPP bond buying program.
• ECB President Christine Lagarde “The risks to economic growth remain tilted to the downside,”.
BOE meeting outcome on 14-Dec-23
• BOE keep rate unchanged at 5.25%. Interest rate is at 15-years high, borrowing cost to remain high.
• The BOE reiterated its policy will be “sufficiently restrictive for sufficiently long” to curb inflation.
Equichain Wealth Advisors: Market View & Opinion
We would like to highlight that U.S. Fed continues to enjoys the highest impact as far as global interest rate is concern. ECB & BOE meeting outcome is in contrast with US Fed which has been surprisingly dovish against expectation seen in past few weeks. We expect global asset class would continue to remain robust and expect year end rally on all major risk-on asset class.
After underperforming in 2022 and first half of 2023, market are heading towards interesting time in 2024. US Fed pivot will be “Big turning point” in global market as two major democracies will be going into election, India’s election in April – May 2024 & US election in November 2024.